Student

AP Microeconomics Name ________________
Mr. Waterman

Chapters 10 and 11 Review Questions

Use the following to answer question 1:

1. Refer to the above diagram. If thissomehow was a costless product (that is, the total cost of any level of output was zero), the firm would maximize profits by:
A) producing Q1 units and charging a price of P1.
B) producing Q3units and charging a price of P3.
C) producing Q2 units and charging a price of P2.
D) selling the product at the highest possible price at which a positive quantity will be demanded.

2.The MR = MC rule:
A) applies only to pure monopoly.
B) does not apply to pure monopoly because price exceeds marginal revenue.
C) applies both to pure monopoly and pure competition.
D)applies only to pure competition.

3. Which of the following is a characteristic of pure monopoly?
A) barriers to entry
B) the absence of market power
C) "price taking"
D) closesubstitute products

4. Other things equal, a perfectly discriminating monopolist will:
A) produce a larger output than a nondiscriminating monopolist.
B) realize a smaller economicprofit than a nondiscriminating monopolist.
C) produce a smaller output than a nondiscriminating monopolist.
D) produce the same output as a nondiscriminating monopolist.


5. If aregulatory commission wants to establish a socially optimal price for a natural monopoly, it should select a price:
A) which corresponds with the equality of marginal cost and marginal revenue.
B) atwhich the average total cost curve intersects the demand curve.
C) at which marginal revenue is zero.
D) at which the marginal cost curve intersects the demand curve.

6. Which of thefollowing is not characteristic of monopolistic competition?
A) relatively easy entry to the industry
B) product differentiation
C) production at minimum ATC in the long-run
D)...